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New Analysis Warns UK Internet Service Providers at Risk from Brexit

Thursday, August 30th, 2018 (8:43 am) - Score 2,694

New research from financial analyst firm Plimsoll Publishing has claimed that Internet Service Providers (ISP) are one of the top 10 UK industries identified as being “under threat” and “most at risk” from Brexit, particularly a “No Deal” Brexit outcome.

The findings were produced using the latest data from Companies House, with Plimsoll then examining the financial health of those companies using information from their previous 4 years of accounts. The research claims to highlight those industries that could lose out if access to the EU’s signal market is restricted, not least by considering their existing financial health and reliance on EU linked exports or connectivity.

Topping the list is the Luxury Goods sector with 39% of companies flagged as being “in danger” and 33% already operating at a loss. New Media companies, Oil & Gas, Subsea Engineering, Biotechnology and Marine Contractors, also make the list. Many of those are heavily reliant on exports to the EU and thus the negative impact from a potential increase in related tariffs.

Interestingly Internet Service Providers (ISP) have also been included into the top 10. Overall 227 ISPs were examined in the latest analysis and 79 were found to be “in danger“, with Plimsoll claiming that around 90% of previously failed ISP companies were given the same Danger rating 2 years prior to their demise.

Industry Ave Profit Margin % loss making % in Danger % of cos exporting
Oil & Gas 1.2% 43% 31% 41%
Internet Service Providers 4.1% 30% 35% 35%
Marine Contractors 2.8% 37% 38% 37%
Luxury Goods 3.3% 33% 39% 55%
Secure Payment Solutions 5.4% 30% 34% 34%
Subsea Engineering 2.7% 39% 31% 56%
Clothing Designers 2.2% 31% 32% 63%
New Media 0.1% 46% 31% 54%
Biotechnology 5.9% 38% 37% 41%
Turbine Systems 3% 37% 36% 57%
Confectionery Retailers 1.7% 31% 36% 64%

Christopher Evans, Senior Analyst at Plimsoll, said: “The chances of the UK leaving the EU without a trade deal appears to have increased significantly of late. While some openly welcome such an outcome, for many industries it will make a tough job even harder. Many UK sectors rely on the frictionless trade and common regulations that being in the EU affords them, however, this could all change on Friday 29th March 2019.”

However we’d take this particular report with a pinch of salt because frustratingly the public version does not clarify precisely why ISPs are so at risk (you have to pay through the nose to get that detail). Furthermore it also fails to clarify whether they’re talking about ISPs in terms of internet content / products (Netflix, Web Hosting etc.) or internet access / broadband providers (different sides of the same coin) or both together. We did ask and had no reply.

On the other hand there are areas which we know could be impacted, such as the loss of EU funding for broadband projects, higher mobile roaming charges and the pros or cons of being disconnected from EU state aid rules. Some providers, such as BT, also get a big chunk of their revenue from outside the UK. Sadly all of this remains uncertain until we know what, if any, final Brexit deal has actually been done.

Earlier this year the Government’s Environment Secretary, Michael Gove MP, told a meeting of UK farmers that fast broadband and 4G mobile coverage remains “patchy and poor in many areas” and that true universal coverage could be “paid for by the money we no longer have to give to the EU” (here). Sadly we’ve yet to see any solid figures being stated to support this claim (wasn’t it all supposed to go to the NHS?).

Arguably a much more useful report was published last year by the Broadband Stakeholders Group think-tank, which did a fair job of summarising the risks and challenges of Brexit for digital communications across the United Kingdom (here). The Carnegie UK Trust has similarly published a paper that highlights some of the potential risks and opportunities that Brexit could bring for digital consumers (here).

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By Mark Jackson
Mark is a professional technology writer, IT consultant and computer engineer from Dorset (England), he also founded ISPreview in 1999 and enjoys analysing the latest telecoms and broadband developments. Find me on Twitter, , Facebook and Linkedin.
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12 Responses
  1. Frank Butcher says:

    No matter what the eventual negative consequences of Brexit are, it will all be worth it when we get those blue passports.

    1. Regis says:

      The ones being made in the eu instead of Britain??????

      Theres a good omen

    2. Joe says:

      Actually if you are a free marketeer then the contract going to the lowest bidder is a ‘good thing’: An open free trading economy.

  2. DIY says:

    Not entirely sure what to take from this article, apart from the largest UK operators getting a (large?) chunk of their budgets from the EU and not to buy expensive analyst reports from Plimsoll?

    Do these subsidies undermine market competition, I wonder? I get rural but not urban – wonder what those ratio figures look like on spend? At the end of the day if we get full fibred up sooner as an economy who cares I suppose…

  3. Optimist says:

    Another instalment of “Project Fear”.

    1. Mark Jackson says:

      Let’s keep the trolling bait out of this one, but please do feel free to contribute something constructive.

    2. Joe says:

      If fairness the lack of detail makes that hard.

    3. Mark Jackson says:

      A fair point I suppose 🙂 .

    4. un4h731x0rp3r0m says:

      I have to agree with the “project fear” remark and do not find it is trolling in any manner.

      I have yet to see one financial report which outlines the benefits and negatives of leaving the EU with any detail and explanation.

      Most just like this seem to consist of shouting “we’re doomed… doomed i say…” with no context as to why and numbers which are as random as the lottery. Or on the other side, shouting “We’re all millionaires” now we do not have to pay the EU (again with little explanation).

      As to the news items remarks about any extra money, whether there will be or not be, where it will go Broadband or all to the NHS.

      It looks like Ms May and co new bright idea is send it all of to Africa rather than worry about the NHS, Broadband, Transport Infrastructure, Investment in start-ups etc etc. I spose we can all look forward to more trade from there or more likely more spam emails from Mr Bombassa who has “monies in a vaults” waiting for us all to claim with just a small one time fee. But heyho lets all dance about it like a Lemming about to leap of a big cliff.

    5. Mike says:

      Seems like Mark is still salty over the result 🙂

    6. Mark Jackson says:

      I think you can call it more a general dislike of all politically induced slogans (from all sides of the divide), which over simplify complicated topics into matters of basic opinion or idiotic name calling and divert away from the evidence based approach to debate.

      Politicians are always coming up with new ones and they tend to act as fuel for trolling. I can respect a person who makes a well-reasoned point, but when the only contribution to any debate is to shout dumb slogans like “fake news”, “project fear” or “insert other silly phrase here from x side of the politician divide” then I merely roll my eyes toward the sky and sigh at the slow death of intelligent debate.

  4. apolloa says:

    Project fear… every time a ‘negative Brexit report’ comes from a ‘financial institution’ it’s project fear..
    Of course they won’t get the EU funding to expand, and he U.K. Government is far too busy blowing 100 billion on a useless train set. But hey ho Openreach seem to make enough money from U.K. councils.

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